Landfill Tax to Increase From 1 April

The Landfill Tax has been with us since 1996 when it was introduced as an environmental tax that would be offset by National Insurance savings. That link has long gone and it is now seen as an essential tool in the fiscal armoury, able to have increases easily justified in the interests of the environment.

The annual Standard Rate Landfill Tax escalator for non-inert waste has been set at £8 per tonne. Currently sitting at £48 per tonne, it is therefore due to rise to £56/tonne on 1 April and will continue to rise through to £80/tonne in 2014 under current government commitments. The rate for inert waste continues at £2.50 per tonne.

So what does this mean in reality? Bin weights vary according to business types, but on average, an 1100 litre will weigh around 65kgs. At £56/tonne, this applies a tax to each bin of waste that goes to landfill of around £3.60 and at £80/tonne, that rises to over £5. So the incentive for recycling is unquestionable and is reflected in the statistics published by HMRC on the amount of waste being landfilled.

Landfill Tax is used as both an economic and environmental instrument widely across Europe. But rates vary hugely with Austria, for instance, already at €87 per tonne. France’s rate is similar to the UK at €50, but theirs is due to rise to €150 per tonne by 2015. Many would argue that Landfill Tax is the most effective form of recycling legislation and with higher rates, you can forget things like the packaging regulations or local authority targets as the cost forces them to treat waste to extract value and avoid the costs of burial.

The Government has committed to the £80/tonne by 2014 with a floor that will guarantee it won’t fall below that until at least 2010. If ever businesses needed a signal for change, Landfill Tax sends a very strong message.